As Xie Min cruises through the narrow streets of Shanghai in his second-hand four-wheel-drive, he revels in the freedom of owning a car while complaining that traffic jams are getting worse by the day. But the 30-something bank clerk is part of Shanghai's traffic problem. Although he is a Shanghai native working in his home city, his car has a licence plate issued in Anhui province , more than 300km away. Shanghai has 1.7 million registered motor vehicles, including more than 700,000 cars, government figures show. But officials admit they have no idea how many unregistered cars with plates from other parts of the country are clogging the streets. The city itself is partly to blame for the problem. Licence plate fees - which are set by auction - hit a record average price of 45,492 yuan in April, more expensive than the cheapest compact car. 'Shanghai is too expensive and it doesn't have many limits on cars with outside plates,' Mr Xie said. In the small city of Huangshan , he paid just 200 yuan for a plate and less than 2,000 yuan for other related inspection and registration fees. A fight between the central government and Shanghai over the future of the auctions finally broke out into the open last month after months of skirmishing. A Ministry of Commerce official said such auctions were illegal because they promoted local protectionism. Consumers are also unhappy at the high cost. Shanghai argued the auction system was the only way to control the number of cars. The city has also earned vast revenue from the auctions since they started in 1986. The local government has asked 15 cities in the Yangtze River Delta region to stop issuing plates to Shanghai residents, or at least to increase fees. But Shanghai cannot make such a request to the whole country and it cannot ban cars from other regions, which would shut off trade. Experts say Shanghai must find more effective ways to address the city's worsening traffic problems than licence plate auctions amid rising accidents and growing environmental pollution. 'This general trend will be very hard to reverse in the next 10 years. If we want to have a better traffic situation, we must have big changes and more rail transport, like subway and light railway lines,' said Lin Hangfei , a professor at Tongji University's school of traffic and transportation engineering. Outright limits on the number of cars are unlikely. The city is home to one of the mainland's biggest carmakers, the Shanghai Automotive Industry Corp, which has entered into high-profile joint ventures with Germany's Volkswagen and General Motors of the United States. In a new policy paper on the car industry, the State Development and Reform Commission said the Shanghai company would be one of the nation's two carmakers allowed to produce more than half a million vehicles a year. Some academics like Professor Lin are pushing for a new fee system for cars to enter the city centre, like in Singapore and London. But under a policy 'white paper' issued two years ago, Shanghai has so far approached its traffic woes as a question of better management, rather than setting limits on the number of vehicles. Meanwhile, demand for cars continues to grow. Yang Lifeng , a saleswoman for a Ford dealership in Shanghai, has seen customers enter the showroom and pay for a car - in cash - within minutes of setting eyes on a new model. 'We don't like people who pay cash. We have to count all those bills,' she said. With the desire to own cars showing no sign of abating, accidents and pollution are growing nationwide. Shanghai's traffic accidents rose more than 20 per cent to just more than 18,000 in the first four months of this year, killing 468 people. The city had more than 54,000 traffic accidents last year, with 1,406 deaths. Inexperienced drivers are one of the biggest causes of traffic mishaps, police say. Shanghai has just started to enforce a new law requiring seat-belts for drivers and passengers in the front seat, fining violators 50 yuan. The mainland also enacted a new road safety law on May 1. The World Bank, meanwhile, says vehicle emissions have become a main source of air pollution in Shanghai and other large cities and it recommends improvements to public transport systems. 'But realising that would require a convergence of multiple government policies and market forces,' the bank said in a report on China's environment.